Universal Coal increasing its thermal resource base

Universal Coal has entered a binding sale of Prospecting Right Agreement with Exxaro to acquire the Arnot South project for a total consideration of ZAR90 million (approximately AUS$ 9.45 million).

The Arnot South project is a multiple seam deposit, approximately 65 km east of Emalaheni and 50 km northeast of Universal Coal’s NCC project in the Witbank coalfield. It has three of the coal seams (No. 4, 3 and 2) typically present in the Witbank coalfield. The No. 2 seam has 92% of the resource (largely extractable by underground means) and is currently the only seam that is considered to have economic potential. It is reported there is significant potential to increase the resource base, particularly in the south of the project area.

Tony Weber, Universal Coal’s CEO, commented: “the acquisition of Arnot South increases Universal Coal’s thermal resource base by 25%, further strengthening our position in the Witbank coalfield, South Africa’s most important source of thermal coal.”

The transaction is subject to certain conditions being met, such as the fulfillment of the waiver of suspensive conditions for transactions of this nature.

Weber continued: “with Kangala having achieved steady state operations at 2.8 million tpa ROM and the ~2 million tpa ROM New Clydesdale colliery expected to be in full production in the latter part of this year, Universal Coal is now pursuing coal ventures capable of supporting larger (+3 million tpa), long-term operations. Arnot South not only meets this requirement, but also hosts excellent quality coal that allows processing flexibility and offers coal product optionality.”

Weber concluded: “the acquisition marks another key step towards growing the company into a sustainable mid-tier coal producer in the medium term.”